How Modern Tariff Policies Are Impacting Propane Industry Production

I am reminded of the tagline from the fake trailer in the 2008 movie “Tropic Thunder” that spoofs 1980s action movies and their ridiculous sequels with Tugg Speedman’s (Ben Stiller) “Scorcher VI — Here we go again … AGAIN.” But the reality is that in 2025, tariff policies in the United States have become the topic du jour, dominating most conversations and industry meetings. These tariffs, unlike the ones implemented in President Donald Trump’s first term, have proven much stickier and with a larger impact on the propane industry than before. Even so, based on my interactions with industry colleagues in the United States and Canada, there remains a large amount of confusion surrounding implementation and potential impacts. 

In Trump’s first term, he — much like today — viewed international trade as a broken system that needed fixing through strong-arm tactics and negotiation. Tariffs were floated around at large but were seldom implemented as retaliation, and eventual concessions came quickly from trading partners. He successfully orchestrated the dissolution of the North American Free Trade Agreement, more commonly known as NAFTA, and ordered the development of a new treaty to replace it with stricter rules of origin and conflict resolution mechanisms; this agreement eventually became the United States-Mexico-Canada Agreement (USMCA). But the president’s main tariff implementation in his first term was on steel and aluminum, citing concerns for national security and using provisions in Section 232 of the Trade Expansion Act of 1962. 

While controversial at the time, the administration provided a mechanism for exclusions, which were eventually granted for North America and other allied countries. Interestingly, while many view the issue of tariffs as a tenet unique to Trump’s policy, the Section 232 tariffs (how the steel tariffs began to be referred to) were maintained during former President Joe Biden’s administration. Biden even took it a step further by including language requiring traceability to where the steel and aluminum were melted and poured; this requirement went beyond the provisions of the existing free trade agreement. 

Fast forward to 2025: Trump has reengaged with his foreign policy and taken it to new heights. Currently, there are three relevant tariffs being monitored: the International Emergency Economic Powers Act (IEEPA) tariffs implemented at the beginning of the year on Mexico and Canada to combat “fentanyl trafficking”; reciprocal tariffs implemented worldwide, including a 10% base and increments based on country-specific blocks to free trade with the U.S.; and the aforementioned Section 232 tariffs, which were updated and strengthened. The following will review the potential impacts of each of these duties on the propane industry. 

IEEPA Tariff Policies & Reciprocal Tariffs Overview 

The IEEPA tariffs are duties implemented on all products coming from Mexico and Canada with the goal of pushing those countries to act on fentanyl trafficking entering the U.S. This tariff includes an exemption for products complying with USMCA rules of origin, which reduced the overall impact of the duties on the propane industry. Reciprocal tariffs announced on April 2, 2025, have since been implemented upon the maturity of the negotiating period. This has resulted in an increase in the cost of manufactured goods and raw materials, primarily from Europe and Asia. These products include brass castings used for valves, as well as electronics used in monitors. 

As expected, the IEEPA and reciprocal tariffs have strained relationships with trading partners — especially Canada, which in turn raised reciprocal tariffs and has threatened on many occasions to tax energy products exported to the U.S., a mechanism that U.S. trade policy currently does not consider. China has also responded with barriers to the export of rare earth minerals, escalating tensions between superpowers. The National Propane Gas Association (NPGA) and the Canadian Propane Association (CPA) have worked closely throughout this entire process to ensure the minimization of impacts. NPGA has spent considerable resources in support of the industry, and both Stephen Kaminski, president and CEO of NPGA, and Shannon Watt, president and CEO of CPA, appeared together at the 2025 Southeastern Convention & International Propane Expo in Charlotte, North Carolina, to discuss tariffs from both perspectives and reaffirm support for both markets. 

The U.S. Supreme Court is considering the case on the president’s authority to unilaterally implement tariffs without congressional approval. If the court rules against the executive branch, the barriers would be removed and duties paid would be reimbursed to importers. This would result in a massive outflow from the U.S. Department of Treasury, for which the administration will likely seek to maintain its new status quo through other means. While this may be old news at the time of publication (the Supreme Court is meeting as this piece is being written), resolution might still be far off. 

Section 232 Tariffs 

While the Section 232 tariffs on steel and aluminum were originally crafted to protect the U.S. steel industry, the updates to this policy are worth noting. These include the increase of aluminum tariffs from 10% to 25%, the removal of all exclusions, the elimination of the exclusion process and the addition of an inclusion process in which industries could petition the government to widen the spectrum of products taxed from foreign sources. What initially only covered raw steel was quickly expanded to include practically the entirety of chapters 72 and 73 (steel), encompassing derivatives such as manufactured products (yes, that means propane tanks and regulators). The only exclusion provided for derivatives was the provision that tariffs would be exempt if the steel content of the product was melted and poured in the U.S. The administration quickly moved to increase those duties from 25% to 50%, announcing the change at a rally held at U.S. Steel, which had recently completed its acquisition by Nippon Steel. 

The impacts of this tariff go beyond simple trade questions. Erecting a significant wall that affects competitiveness from foreign sources allows domestic steel manufacturers to increase prices and buffer margins, raising the cost bar not only for foreign manufacturers (whether they pay tariffs or opt for U.S. melted-and-poured steel) but also for domestic manufacturers. 

Prices for steel derivatives have fluctuated throughout the year based on market uncertainty, rapid policy updates and commodity shifts. Canada has also implemented retaliatory steel tariffs on products from the United States, which has upended traditional supply chains for equipment, possibly increasing the supply of manufactured products within the U.S. These movements from foreign and domestic sources alike significantly impact the bottom lines of propane marketers and their yearly planning regarding equipment acquisition costs. In this sense, marketers must budget accordingly, allow for a sizable margin of error in their upcoming plans and seek close partnerships with suppliers to mitigate volatility. 

Unlike the first two tariffs, which face significant legal challenges in U.S. courts, Section 232 tariffs have proven quite sticky, having survived two vastly different administrations. Combined with the steel industry’s strong grip on policymakers and a prevailing sentiment toward revitalizing American manufacturing, this provides the foundation for a long-lasting impact of steel and aluminum tariffs. 

Some flexibility has been shown in recent months, including a statement that the trade deal reached with the United Kingdom would remove the steel tariff, yet months later the duty remains (albeit reduced). In 2026, the three North American trade partners will engage in a review of the agreement that could modify certain clauses or do away with it altogether. The sections most relevant to the steel industry and its derivatives will be a renewed focus on origins and likely the inclusion of melted-and-poured requirements. This would be a net positive for the trading bloc, as there is ample capacity in the three countries for steel manufacturing, allowing the market to supply itself and minimize dependence on products originating from Asia. 

Frustratingly, resolutions still seem far off. The Supreme Court case, trade renegotiations, retaliations and concessions have yet to pierce the resolve of the current administration. Marketers are now faced with the task of reevaluating supply chains ranging from propane to equipment. Aligning supply with longer-term contracts and proactive planning can mitigate the swings caused by policy uncertainty. It is time to be proactive in negotiations; otherwise, we must wait for Tugg Speedman to return in “Scorcher VII — Global Trade Meltdown.”